Grant Cardone: Ownership vs. Renter Affordability Gap Spreading As Buying Cost Soars
With the gap between the cost to buy a home versus renting at its highest in 50 years, real estate mogul Grant Cardone predicts his investors will see a return on their investments in his company's real estate portfolio over the next 10 years.
Cardone shared a graphic from Visual Capitalist illustrating how rising mortgage rates and home prices have impacted the housing market.
In October 1981, during the peak of homebuying for the oldest baby boomers, the 30-year fixed-rate mortgage hit a record high of 18.63%. At that time, the monthly cost to purchase a home was $875 per month and renting cost was $365 per month, according to the Visual Capitalist chart.
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During the 2006 housing bubble, those numbers spiked, with rental costs nearly tripling to $1,056 per month. The monthly cost to buy rose to $1,518 but was far from the percentage increase renters experienced.
In 2021, home values spiked as millennials entered prime homebuying age at a time when mortgage rates were historically low. The cost to rent shot up to $2,697 per month while rental prices increased to $1,634.
Cardone predicts rents will average $2,800 per month by 2034.
"This would increase the value of Cardone Capital portfolio by double," Cardone wrote in a May 1 post on X. "If I'm right, this will provide an 8%-10% cash flow to our investors and 2X-3X return on capital investment."
That was little comfort to some of Cardone's followers, with one posting, "If things keep going the way they're going, the government will force you to let people stay without paying rent for the next pandemic until the bank forecloses on your properties. Then BlackRock will buy up a lot, and there won't be any private ownership after that."